A conversation with Vincent and Jeff

Q: What inspired you to found Cranemere?

Vincent Mai: A lifetime in finance has taught me that, in an increasingly complex and uncertain world, one of the best ways for investors to protect their capital and get consistent returns is to own strong performing companies for the long term. Having led a successful private equity firm for many years, I have seen up close how many outstanding mid-sized companies there are in the US and abroad.

The traditional private equity structure requires that you sell those businesses within three to five years whether or not you want to. That doesn’t make sense! Why sell a good company you have owned for a few years when you can judge the risk and potential of that business really well and you know it’s a great long term investment? Cranemere was established to address that problem. We have permanent capital in a corporate structure and out mantra is “buy, build and hold”

Q: Was there an underlying philosophy guiding you as you approached the challenge of starting something new?

Vincent: Yes, first of all, it had to be as simple and straightforward as possible. Having served on the Investment Committees of several institutions, I have come to the conclusion that many fund managers have made investing too complicated and performance has often suffered as a result. Secondly, in many structures the interests of the manager and the investor are not always properly aligned. In our structure the interests of our shareholders, our operating companies, and the Cranemere executive team are fully in sync. We all rise or fall together!

Q: What attracts companies to the Cranemere model?

Vincent: The companies we back are market leaders. They have developed a better product, or better business model, or both. They are superior at execution and have a strong culture. To capture the opportunities ahead, these companies need a different kind of capital partner — one that supports their long-term priorities and nurtures their next stage of growth. We provide deep pockets and stability through multiple business cycles, and continue to invest in the business without stripping out cash. We don’t distract management with the exit demands of a private equity firm and we don’t impose onerous layers of approval or high levels of debt that impede a company’s abilities in any way

Q: Has launching Cranemere been a worthwhile experience for you?

Vincent: Yes! Of all the things I’ve done in my career this has been by far the most rewarding.

Q: Why?

Vincent: Because our strategy and structure are distinctive and, as far as I can tell, nobody is doing it quite this way. Now that we have a few years behind us my colleagues and I are seeing that there is a real niche for Cranemere and that the opportunities for us are bigger than we had anticipated. There are many investors searching for a long term private investment vehicle like ours that is committed to transparent governance and a complete alignment of interests between our management team and our shareholders. And there are many attractive privately owned companies where, for example, the family or the founders need to go through an ownership change and are looking for a long-term partner like us who is committed to growing the business in a thoughtful and strategic way, working collaboratively with management. Many of these business owners didn’t know a company like Cranemere existed and it has been very satisfying to engage with them because we represent a potentially better solution to meeting their needs.

The ethos of Cranemere is to be a natural long term home for family owned businesses and companies founded by entrepreneurs.

Q: So you think of your firm more as a family?

Vincent: Yes, we want to preserve a spirit of partnership for family- and founder-run businesses who become part of The Cranemere Group

Q: Why the emphasis on partnering with founder- and family-run companies?

Vincent: Builders of companies view their businesses as their creations; and not just assets. These firms are their babies. They have management teams who are problem-solvers who love the quest; they live for what they do. Cranemere is the ideal partner for founders who want to continue growing and improving their businesses.

Q: Would you give us an example of the kind of company you hold?

Vincent: One of our wonderful companies builds custom-made office furniture on demand, promising delivery in days. The founders created a highly profitable, industry-leading business model that is resource efficient. Both partners were extremely creative and talented business people. One was ready to move on in his life to pursue other interests and the other partner, the CEO, was still committed to the company and eager to continue building the company

Q: What did the company’s founder who stayed with the business see in Cranemere?

Vincent: From the start, the CEO/founder needed to solve a complicated ownership situation while positioning the business for its next chapter of growth. He didn’t like the same old standard suite of options presented to him by other firms. He didn’t want the all-consuming task and cost of doing an IPO. He didn’t want the company to lose its soul in an acquisition by a large corporation. And he had no interest in being bought and sold again and again – with all the distractions created by the process. That’s when he discovered Cranemere. Succession planning is an inevitable fact of a business’s life. In the case of a partnership or a family business, it can get very complicated and sometimes even traumatic. We founded Cranemere to help solve this dilemma and we are seeing that our approach can be very helpful in many cases. And, again, when we run the numbers we see that reducing the frictional costs of a buyout represents opportunity for both the companies we hold and Cranemere shareholders.

Q: One of your key firm values is ”business as a force for good.” Can you explain the reason and your approach?

Vincent: We’re seeing an important shift in the way many companies are building their businesses and creating value based on a more holistic approach. They are embedding stakeholder interests and human and environmental well-being in their products and services as well as in their business models and operations. These companies are “purpose-led.” Building a betterworld is core to their vision and ethos, and a critical driver of their success. They are responding to market trends for products and services that are healthier and environmentally sustainable in sectors such as food and energy, and to the demand for employment opportunities that combine work and meaning. This approach aligns with Cranemere’s values. We believe, with our team’s experience in this area, we can be a great home to some of these mid-sized private companies.

Q: How would you like your company to be known? What does Cranemere stand for?

Vincent: Our objective is to create a firm that will be admired for generations to come: to serve, with a lasting commitment, the companies we own and the shareholders who have put their trust in us. We want to show what good stewardship of great companies can achieve.

Cranemere is named after a farm in South Africa that has been in the same family for seven generations. I grew up next door to it; and have always admired this enterprise. Each generation has taken over the farm from the previous one and improved it before passing it on to the next generation. So the answer to your question about what we stand for is to be found in our name itself and in the fact that we are, ultimately, applying the collective experience and knowledge of the Cranemere team to prove the financial and social impact of the enduring values that I have admired since I was a boy. In essence, we’re talking about the inter-generational stewardship of great companies for the greater good.